Market braces for Multiplex slide

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Shares in Multiplex Group are expected to plunge as low as $2.50
when trading resumes this week as another profit downgrade
looms.

On Friday the developer's founder, John Roberts, stepped down as
executive chairman and trading in the shares was suspended pending
clarification of the group's losses on its troubled Wembley Stadium
redevelopment in England.

The chairman of the construction division, Noel Henderson, also
resigned as a director.

The Australian Securities and Investments Commission has
confirmed it is looking at the level of disclosure provided by the
company.

The property developer and funds manager listed on December 2,
2003 at $4.05 and was trading at $3.26 before the trading halt. The
shares touched a high of $6.07 in February this year before
plunging on news of subcontractor problems at Wembley and a $68
million profit write-down.

Shaw Stockbroking research director Scott Marshall said the
market was now extending its concerns to other Multiplex
construction projects, including the $1.5 billion White City retail
development in London where it sold its 25 per cent equity for what
appeared to be a loss.

"It will now take, I think, a bit of time for the market to be
comfortable with Multiplex because it's been highlighted that there
is a risk in the project management operations in the United
Kingdom in particular," Mr Marshall said.

The Multiplex board spent the weekend in crisis talks before a
profit update due today. The board admitted on Friday that "the
margin position on the Wembley project may have deteriorated
significantly" but the actual position was unknown at that
stage.

Multiplex said it was likely that the losses on the project
would exceed the $50 million indemnity provided by the Roberts
family.

The construction group was expected to post a 2004-05 profit of
about $235 million. That figure is now tipped to be much lower.

Ben Dalling from Goldman Sachs JBWere said the market had been
waiting for further bad news about Wembley so Friday's announcement
did not come as a major surprise.

"However, the magnitude of the downgrades may surprise on the
upside given that it appears management themselves are unsure of
the group's financial position with the Wembley project," Mr
Dalling said.

"The resignation of John Roberts as chairman was partially
expected as part of Multiplex's move to increase the independence
of the board."

Multiplex's UK managing director, Martin Tidd, spent Saturday at
the Wembley site reassuring subcontractors and union chiefs their
jobs were safe and that the project would be completed by the due
date, January 31, next year.

The operator of the landmark football venue has a fixed-fee
contract with Multiplex worth £326.5 million that ensures any
cost overruns are borne by the Australian firm.

Mr Tidd also reassured Michael Cunnah, the chief executive of
Wembley National Stadium, and Brian Barwick, boss of the English
Football Association, the company remained solvent and that the
financial situation would not affect construction.

A dispute with Cleveland Steel in February delayed some work for
five weeks. A union official suggested the project is months rather
than weeks behind schedule, putting the opening for the 2006 FA Cup
final in jeopardy.